Nigeria News

UPDATE 1-Transferwise says no longer sending remittances to Nigeria under new FX rules

(Add central bank comment)

LAGOS, Dec 17 (Reuters) - Money transfer firm Transferwise said on Thursday it will no longer send remittances to Nigeria after new rules in the West African country changed the currency of payment to the U.S. dollar from naira.

Nigeria’s central bank last month changed a 2013 rule that allowed payment in naira after the currency fell to a 3-1/2 year low of 500 naira on the black market, widening the premium with the official market quoted at 381 since July.

The bank said the change was to reduce arbitrage whereby money transfer operators profited from unofficial channels.

Transferwise said it could no longer offer money transfer in naira with its current set-up but was working to reopen transfers.

Nigeria’s central bank said on Thursday a few operators were paying remittances in local currency, contrary to the rules. It has said that Transferwise and Azimo were not licensed as money transfer operators.

Rising dollar demand has been putting pressure on the naira. Importers with obligations have scrambled for hard currency, while providers of foreign exchange, such as offshore investors, have exited after COVID-19 triggered an oil price crash.

Remittances or money transfers make up the second-largest source of foreign exchange receipts in Africa’s biggest economy after oil revenues. Around $26.4 billion was sent to Nigeria last year, according to the World Bank.

Nigeria is hoping it can attract more remittances from its diaspora. But the World Bank expect remittances this year to fall to 2015 levels of $20.2 billion.

Rival WorldRemit said it has started to pay out dollars in Nigeria. (Additional reporting and writing by Chijioke Ohuocha; Editing by Bernadette Baum)